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There’s No Plan. Really There Isn’t.
If there were remaining questions as to whether Donald Trump and Howard Lutnick have a plan -- a roadmap, a blueprint, a few bullet points, a sketch on the back of a bar napkin -- for "Trade War 2.0," they were answered Thursday, when Trump abruptly canceled tariffs on Mexico and Canada just 48 hours after they went into effect.
In case you're not picking up what I'm laying down, let me be direct: Trump and Lutnick have no plan whatsoever.
This is entirely ad hoc and so laughably chaotic that
It’s just like that old children’s story, “The Trump who Cried Tariff.”
Yes, this is all improvised, ad hoc, seat of pants, impulsive, disorganized, emotional. Trump is a poker player like a wet square of toilet paper is a plan. Hopefully Canada will keep the pressure on, Mexico too, because time is not on Trump’s side. Europe is watching and learning, and I imagine these countries are communicating and realizing they can coordinate to bring down Gulliver.
The Canadians are incredibly pissed. I’m seeing it all over social media. Regardless of what their Federal government ultimately does, state and local governments are already taking matters into their own hands, to say nothing of decisions by individuals. Exports and tourism are about to take a serious hit.
Never seen Pearson airport, in Toronto, this empty on a March break.
Even if tariffs are called off for good, the neighbours, to the north and south, may forgive but will not forget: our neighbour cannot be trusted. So, they hope for the best and plan for the worst.
It’s very telling how Lutnick’s hints are having less and less impact. Maybe real investors are starting to worry more about policy unpredictability rather than today’s tariff schedules?
That said, the models don’t care unless vol really starts to move higher.
VIX already at almost 25…was below 15 when Trump elected. One slightly black swan or just capitulation day set off by (whatever – Mump/Trusk team has plenty of bullets they can shoot themselves with) and we spike again like last Aug….
No discernable strategy, but not a bad tactic if your inner circle is given notice just prior to each zig and zag.
That assumes they know what’s zig and zag in this chaos.
So is Elon shorting the Tesla stock? LoL
How would an agency go about acting on these tariffs? “OK. New plan as of Monday – everything crossing the border gets taxed 25%.” “As of Wednesday, remove trucks coming from the North off the list.” “List?” “Ok, as of Thursday, no tax on the stuff coming from the South.” “What about the trucks?” “I’ll have to get back to you on that one.”
The exemption for USMCA-listed goods is apparently complex for business to implement.
Previously any tariff benefit from certifying a good as USMCA-listed vs importing w/o USMCA was often de minimis, but now it is large, so businesses have to go through the whole certification process for a lot more goods – and with the munificent exemption good only for a month or until another errant synapse fires in Trump’s brain, many companies won’t do it yet. Anyway, a perfect example that turning the business environment into a confusing mess constantly shifting at a whim with no advance notice is probably worse than imposing bad but definite rules.
I’ve seen two memes developing from the social media financebros. First, the ridiculous idea of a “Mar-a-lago Accord” where allied sovereign exchange treasuries that pay a coupon, for 100 year zero-coupon ‘instruments’ in exchange for security guarantees. Talk about hilarious! I’m not going to list the dozens of reason this is so stupid.
The other idea is that the Dunning-Kruger administration is engineering a recession ‘to hurt the asset class’ and lower rates so the poors can afford a house and afford groceries. A hilarious ad-hoc justification for their incompetence in blowing up global finance and betraying all our alliances. I see McElligott has been writing about this idea. More Fourth-Turning Kremlin-like garbage. Ugh.
I’d like to hear their story about how lower rates will help the middle class buy homes when they all lose their jobs as a result of a recession. I’m pretty sure the RIF’d Fed workers wouldn’t care if rates were 0% tomorrow since they’re out of work and wouldn’t qualify for a mortgage.
His supporters will do anything except admit there’s no plan.
The investors in the US stock market have lost confidence. Reversing tariffs did not reverse negative investor sentiment.
We’re so screwed! (Sorry for the unladylike comment, but I can’t think of another phrase to convey my disgust and frustration).
What do you think Sheinbaum is doing? I mean taking place are calls with Trump and troops deployed at the border, and through it all she’s negotiating politely and respectfully with Trump. But she’s too smart to bank on that. I can’t believe she is not making back up plans. China investment, China manufacturing plants, chips, cars? Or is this already underway and I’m way behind.
Two times cried wolf. What happens the third time in 30 days?
Financiers who think they are above Trump. For now yes maybe, but the authoritarian playbook is to bring the powerful to heel. The only chance you have is to make your move before the next favored guy turns on you.
Lutnik (which autocorrected to Buttock on my phone appropriately enough) says all bad data right now is because of Biden. Who are you gonna believe: Buttock or your lying eyes?
I see Trump and Johnson realize they have no chance of passing a budget by March 14 so now they have to figure out how to pass another extension. If there was ever a time for Dems to dig in, the budget talks are it. I seriously doubt Republicans can pass a continuing resolution on their own.
Musk appears to be wearing out his welcome so I would not be surprised if he’s the sacrificial lamb to get Dems to agree to extend the budget deadline.
Trump’s minions are hard at work dismantling the US Government, while taking control of law enforcement, intelligence, and the military and ending US support for Ukraine, all in the service of Vladimir Putin.
The tariff chaos and insults hurled at Trudeau are just cover.
America is just a few Supreme Court decisions from declaring Trump President-for-Life, and then his work will be done.
Lutnik is the poster child for mediocre whitemen whose egomaniacal sociopathic world view is destroying humanity.
Trump is less than mediocre, he’s bottom quartile. But Trump (as a political entity) doesn’t exist without wealthy mediocre whitemen financing him.
It is how fascist hate cults tended to form in modern times.
Love the passion, agree!
Long day, late. I know nobody will agree or even read this, but….I’m getting tired of the 3 way good guy, bad buy trilogy routine between China, Russia, and Trump.
Me too.
The U.S. is becoming increasingly unattractive or even uninvestable for foreign investors. Beyond stock market volatility (fine), the betrayal of allies, the expansionism, the repeal of anti-corruption measures, potential corruption re. crypto stockpiles and the complete sh**show that is DOGE, are severely hurting confidence in the US. I mean, what kind of government are you running over there? In a downturn, the dollar— which usually cushion any blows—actually weakens, amplifying losses. Never thought we would be here now.
I’m ashamed to admit my phone has been ringing off the hook after a comparatively fallow period. But the lawyering-consulting-lobbying business is off the charts right now. Everything is negotiable and anything is possible with the US government under Mar-A-Lardo. I have even been shelved by two law firm clients who didn’t appreciate my recommending that their client not overreact or even do anything re tariffs until the smoke cleared. That was not revenue-maximizing for those law firms, so I understand their complaint, and accept my punishment,
But besides converting thousands of payroll tax paying employees into unemployment compensation seekers (or worse, e.g., incarcerated awaiting deportation), seems like whole swaths of the government, as well as the public and private economy, are now engaged in a very costly and unproductive existence of cleaning sand out of the gears of their day-to-day businesses. What does this mean? Does this affect us? Should we be talking to anyone? Lets get on a Zoom call at least. What do you mean that person’s not here anymore?
Among other things. federal employees now are wasting lot of time talking about Elon’s weekly justification checks, in addition to attending going-away parties or setting up collection plates for officials just beginning their government service or careerists just years away from retirement. Meanwhile, every entity dependent on federal govt payments is reassessing their cash flows and ratcheting everything lower to conserve resources or liquidity. lest payments stop, which of course is already happening.
On top of the grift, the disruption costs of this foolhardy amateur exercise in belt-tightening will no doubt be on par with what it would otherwise take to eradicate childhood poverty in this country. Owning the libs seems sort of innocent and fun until you do the body count,
After decades of trying, I’m still figuring out the stock market, But I can confidently tell you that this sort of uncertainty and friction is a huge net loser for the economy at large, “much bigger than anyone’s ever seen before.” Anytime it’s high time for lawyers and bad times for manufacturers and farmers is generally a good time to go underweight.